How to Teach Your Kids Financial Patience

Could you leave your young child alone in a room for a few minutes with a fluffy, sweet marshmallow…and trust him or her not to eat it until you get back? What if you promised a reward of a second marshmallow if your child waited? Could he or she do it?

Not entirely sure? You’re not alone. Self-control is a really tough task for kids—and most grownups, too, when sweets are involved!

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The Famous Marshmallow Test

In the 1960s and ‘70s, a Stanford University researcher named Walter Mischel actually conducted a psychological experiment with kids and marshmallows (and some other treats). The Marshmallow Test became legendary. It’s been recreated and filmed many times. Mischel also recently released a book about his experiment and its implications.

The bottom line: Helping your child learn to “delay gratification” may be a key to helping them be financially successful. It may also help your kids in other parts of their lives—working to improve their grades, avoiding drugs, not overeating, etc.

Why the Wait?

Can your child give up something they really want right now in order to wait for something better down the road? For instance, can a young child skip buying candy today and save their money to buy an Xbox game in a month? Can teenagers occasionally skip having lattes with friends in order to save up for a car?

Financial experts like Beth Kobliner and Farnoosh Torabi and say absolutely yes. After all, when your kids are adults, the stakes will be higher. They may need to trade all sorts of day-to-day purchases so they can save for a vacation, house, retirement, etc.

4 Ways to Teach Kids to Wait

You can help teach kids financial patience—starting right now:

• Offer a modest allowance. Even if you can afford more, pay your child just a little less. Make sure they’ll always have to save up for a few weeks, or even months, for bigger purchases.

• Require waiting periods. Whenever your kids want to pay for an item or experience over $x (you set the limit)—even if they already have the money—make a rule that they have to wait. Have your child note the item on a family calendar and wait two weeks (or more for bigger buys). Hint: It also helps if you, the grownups, model this same behavior.

• Have older kids pitch in. Don’t automatically pay in full for your teen’s school trip to Disney Land or that new phone. Let your teen earn some of the money with a job or extra assigned chores at home. You’ll automatically build in some waiting time as your child works and saves.

• Be cautious about loans. Tempted to advance your child a few extra bucks when they’re short of money? Don’t do it. Let your kid save up or work more and wait. Particularly when kids are new to managing a bit of own money (even a small allowance), it’s good to set a family rule that you won’t loan money or pay allowances ahead of schedule.

Be clear that it’s not OK for your kids to borrow money from friends, either. You want your budding tycoons to realize that they should only buy things when they have enough of their own money in hand. Credit lessons can come later.

(photo courtesy © Ken Bosma cc2.0)